Exxon Mobil's shareholders sound off

Vote goes against proposal for CEO-chairman separation

By

SteveGelsi

NEW YORK (MarketWatch) -- Exxon Mobil Corp. shareholders pressing for the posts of chairman and chief executive to be made separate and for the company to ramp up efforts to develop alternative energy fell well short of achieving majority votes at the oil giant's annual meeting Wednesday.

Despite the public involvement of the heirs of Exxon Mobil patriarch John D. Rockefeller for the first time, about 39.5% of the 4.4 billion shares cast supported a resolution to create a stand-alone chairman -- about the same level of support as last year.

Of the 19 shareholder resolutions put to a vote, the greatest support --40.7% -- came for a measure to provide an advisory vote on executive pay at the company
XOM, +0.77%

About 95% of shareholders supported the company's slate of directors, including the election of Edward E. Whitacre Jr., the former chairman and CEO of AT&T
T, -0.07%

Exxon Mobil Chairman and CEO Rex Tillerson presided over a mostly orderly meeting in Dallas, near the company's headquarters, as he emphasized its track record in delivering a record profit of nearly $41 billion last year and share buybacks of $28 billion.

He laid out the company's forecast -- that fossil fuels will play a dominant role in the world at least through 2030 -- even as key shareholders questioned whether the company is sufficiently planning for the future.

"We're very, very pleased with the performance that the company has been delivering," said Peter O'Neill, a Rockefeller family member. "All of Exxon Mobil's acknowledged strengths are no guarantee it'll remain flexible and viable in the future. We're asking you to consider more closely the changing needs of Exxon Mobil's customers.

Shareholder Robert Monks on Wednesday repeated his call for separate chairman and CEO roles.

"I've been here before," Monks said. "I'm here because shareholders should have a role in the governance of corporations. ... Directors should take their concerns seriously."

After rising to 40% support in 2007 from 20% in 2002, it's reasonable to assume that the board of directors would inform themselves about the issue, Monks said. He pointed out he's never gotten a call or letter from the board.

The largest Rockefeller family shareholder to co-sponsor the item was Laura Thorn, who owns 181,119 shares, according to documents released by Exxon Mobil.

For her part, Neva Rockefeller Goodwin questioned whether fossil fuel would remain the dominant form of energy in the world by 2030 if alternative energy grows as quickly as the Internet and the telecom industries.

'Exxon Mobil-o-saurus Rex'

Earlier, Tillerson said the corporation has repurchased 20% of its stock in the last five years. The buybacks have boosted the ownership stake of each share for Exxon Mobil equity holders.

Tillerson said the company offers an overall better value and returns than its competition and the broad market. Exxon Mobil has been buying back about $7 billion of its stock every quarter.

Asked why the company continues to repurchase stock instead of boosting its dividend more than it does, Tillerson said buybacks help provide flexibility down the road for capital spending and other measures.

Tillerson conceded that the company's considerable cash flow presents a challenge. He compared Exxon Mobil's stock buybacks to the period prior to when Exxon Corp. bought Mobil about 10 years ago.

"Prior to the Exxon and Mobil merger, share buybacks went on for a decade with cash available while also increasing the dividend," Tillerson said. "Those shares paid for the Mobil merger."

Looking ahead, Exxon Mobil continues to plan share buybacks, but the oil giant has no plan to take itself private by buying back all of its stock, he said. Tillerson drew some chuckles when he joked that the prospect of going private would be tempting.

Speaking on the subject of same-sex marriage benefits, Exxon said it'll abide by local laws rather than drafting companywide policies, Tillerson said.

"We're guided by the law and we abide by the law as to our policies of individuals. ... We have a broad policy that applies to all no matter what circumstance wherever they're working throughout the world."

Stephen Viederman of New York City said he drafted a shareholder resolution for the company to draft a comprehensive renewable-energy policy, while thinking about his grandchildren.

"When you finally decide to go to renewables it'll be too expensive to buy in and the integration with oil and gas may be too difficult," he said. "Exxon is acting like a dinosaur ... to a changing environment. Exxon Mobil-o-saurus Rex will disappear."

To be sure, several shareholders voiced support for the company and for the push by the oil industry to drill in the Artic Nat6ional Wildlife Refuge.

One shareholder drew a big round of applause with a measure to ban shareholder resolutions altogether. Exxon Mobil urged owners to vote against it, however.

S&P firms resist separating roles

As the largest company in the S&P 500 Index
SPX, +0.59%
Exxon Mobil isn't alone in resisting corporate-governance advocates who want to split up the chairman and CEO jobs as a way to strengthen the voice of shareholders.

The chief executive currently holds the chairman's job at 307, or 62%, of a survey of 494 of the S&P 500 companies, according to the Corporate Library.

At an additional 78 companies, the chairman is the former chief. At 27 of the firms, the chairman comes from the ranks of executive management. Only 82 have named an independent director as chairman.

Among European firms, the separation of the two jobs is far more common, including at Exxon Mobil rivals Royal Dutch Shell
RDS.A, +0.09%
and BP Plc
BP, -0.50%

Exxon isn't the only U.S. oil company facing pressure to split its CEO and chairman jobs. In San Ramon, Calif., Chevron Corp.
CVX, +0.56%
shareholders rejected a similar resolution, leaving CEO and Chairman Dave O'Reilly with both titles.

Chevron shareholders also rejected proposals aimed at requiring that the No. 2 U.S. oil company draft a human rights policy, set measurable goals to reduce greenhouse gas emissions, and report on the environmental impact of its oil sands extraction in Canada.

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